Smaller Seattle head tax, with end date, floated by city council

15/05/2018

After weeks of controversy during which online retail giant Amazon paused the planning of construction on a major city project, the Seattle City Council voted Monday to approve a scaled-down, almost $50 million annual head tax on large corporations.

The legislation calls for a tax of $275 per employee, per year on for-profit companies that gross at least $20 million per year in the city - down from a $500-per-head tax that Mayor Jenny Durkan had threatened to veto.

About 60% of the tax revenue will go to new housing projects for low and middle-income Seattle residents.

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The collected revenue would be used to address the civil state of emergency over homelessness that the city has been in since 2015.

That's down from the $75 million a year the original proposal would have generated by imposing a $540 head tax per employee for the next few years, after which it would be converted to a 0.7% payroll tax.

Amazon is the city's largest private employer and will pay the most under the new tax law.

"This was never a proposal targeting one company, but Amazon made the conversation about them when they expressed their intentions to pause construction on their new office tower pending a vote on our Progressive Tax on Business".

Co-sponsor of the charge, Teresa Mosqueda, said the bill was an opportunity to provide housing: "People are dying on the doorsteps of prosperity", she said. The number of homeless students in the city's public schools has tripled, to almost 4,300 last school year.

Amazon vice president Drew Herdener said in an emailed statement that the company was disappointed by the council's decision to introduce "a tax on jobs".

Representatives of businesses warned that the tax would drive employers out of town, while others speakers questioned whether Seattle's city government could be trusted to spend the additional tax revenue wisely. After rejecting the alternative, council members at a committee meeting voted 5-4 to put the tax on the full council agenda scheduled for later in the day.

"By threatening Seattle over this tax, Amazon is sending a message to all of our cities: we play by our own rules", the letter said.

"It seems to me that the debate about this is about the fear of what this city is becoming", Councilmember Bruce Harrell said, noting that people see homelessness on one hand and successful businesses on the other - each changing the character of Seattle.

Other unions, including the Service Employees International Union, supported the tax.

The Seattle metropolitan area also is home to the third-largest concentrations of homeless people, nearly 12,000 counted in a January U.S. government survey, and almost half of them were living on the streets or otherwise unsheltered.

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